Merged Bonds May Spur Fannie, Freddie Revamp

The head of the Mortgage Bankers Association on Monday called for federal policy makers to merge the mortgage-backed securities issued by Fannie Mae and Freddie Mac, which would represent one of the most significant steps toward replacing the two government-controlled finance companies with something new.

The U.S. government took control of Fannie and Freddie nearly five years ago through a legal process known as conservatorship. The companies have operated independently, with each issuing its own set of mortgage-backed...